ISLAMABAD: Pakistan has secured a major financial boost as the International Monetary Fund (IMF) approved a $1 billion second tranche under the Extended Fund Facility (EFF). This decision comes at a time when regional tensions with India have escalated.
The announcement was made in an official statement by the IMF Executive Board on May 9, 2025. The approval marks a significant milestone in Pakistan’s journey to stabilize its economy.
The IMF confirmed: “The IMF Executive Board completed the first review under the Extended Fund Facility Arrangement, allowing the authorities to draw the equivalent of about $1 billion.”
This latest disbursement brings the total under the 37-month EFF to approximately $2 billion.
Climate Resilience Gets $1.4 Billion Boost
Along with the economic support, the IMF Board approved Pakistan’s proposal for a Resilience and Sustainability Facility (RSF). This new facility will provide around $1.4 billion to help the country strengthen its defenses against climate-related challenges and natural disasters.
Pakistan is among the countries most vulnerable to climate change. The RSF will enhance the country’s resilience to floods, droughts, and extreme weather events.
Staff-Level Agreement Finalized Earlier
In April 2025, Pakistan and the IMF had reached a staff-level agreement on two key components:
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The first review under the 37-month EFF worth $7 billion
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A new 28-month arrangement under the RSF worth $1.3 billion
The IMF clarified: “The staff-level agreement is subject to approval of the Executive Board. Upon approval, Pakistan will access about $1 billion (SDR 760 million), bringing total disbursements to $2 billion.”
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A Strategic Blow to Indian Propaganda
Analysts believe this approval comes as a strategic win for Pakistan on the international front, especially as India attempts to isolate Pakistan diplomatically following the recent military tensions.
Despite the ongoing conflict, the IMF’s green light reflects confidence in Pakistan’s economic reforms and governance.
The IMF’s dual support — both economic and climate-related — strengthens Pakistan’s position regionally and globally. With $2 billion now disbursed and $1.4 billion in climate financing secured, Pakistan is better equipped to handle both economic pressures and environmental threats.
This development also reinforces the government’s commitment to structural reforms, helping to rebuild global investor confidence and stabilize domestic markets in uncertain times.
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